Iraq's 12 mbd Objective Abandoned?

A report in the London Times this week had it that Iraq, fearful of driving down the world oil price, had given up its previously announced objective of achieving a capacity of 12 million barrel per day in oil production. Its new objective, of 6.5 to 7 million barrels a day, would mean a renegotiation of contracts with the oil companies. "Baghdad believes it would not be in its interests to try to achieve the 12 million target by 2017 because boosting global supply would depress prices. Ministers also argue that there is not sufficient demand for the extra oil, despite soaring prices. . . . High oil prices, which have doubled since the 12 million target was set two years ago, will compensate Iraq for the lower production. Ministers also recognise that creaky pipelines and storage facilities could not cope with such an increase. The International Energy Agency estimates that investment of more than $US160 billion ($149bn) would be needed to meet the target."

According to Reuters, however, the report was swiftly denied by Iraq's oil minister, Hussain al-Shahristani.

"Absolutely not. There is no intention at all to renegotiate the contracts," Shahristani told Reuters at the launch of a power plant project outside the city of Kerbala. . . . . 

"We are contracted for announced production capacity of around 12 million barrels per day," he said. "But how much we will produce, really, this depends on the international market situation and the market demand."

Early Warning received a similar denial from Reba Husari, editor of Iraq Oil Forum:  

 Halving the production target is nonsense. No one is talking about that. There are internal discussions on whether it makes more sense to increase the plateau periods for the giant fields, which would require reducing the original plateau agreed. That makes sense, both in terms of the "health" of the fields, and responding to market requirements. But each field is different and the same rule cannot apply to all. At this stage it's all internal and no one has approached the IOCs with anything concrete.  

Then the FT chimed in with a story affirming the gist of the report in the London Times, but emphasizing infrastructure restraints rather than any foreboding on the part of Iraqi officials about depressing prices:

[E]xecutives and officials have told the Financial Times that they are now firmly convinced that the target [of 12 million barrels a day within six years] is beyond reach because of mounting constraints in pipelines and export terminals. They believe that Iraq will soon scale down the target. 

 “I think the Ministry of Oil would not disagree with a ramp-up in production towards 5m-6m b/d by 2015 or so,” said Gati Al-Jebouri, the head of Lukoil in the Middle East. He said that even the lower target could be challenging. “Whether that is achievable given the infrastructure is a difficult question to answer.”